Hindustan Unilever Ltd.’s quarterly profit rose in line with estimates, aided by volume and price hikes, even as margin contracted due to higher costs.
Consolidated net profit of India’s largest consumer goods maker increased 8% over the preceding year to Rs 2,474 crore in the quarter ended December, according to its exchange filing. That compares with the Rs 2,480.04 crore consensus estimate of analysts tracked by Bloomberg.
Sequentially, however, its net profit fell 7%.
Highlights (YoY)
Revenue rose 16% to Rs 15,597 crore, compared to an estimate of Rs 14,830.5 crore. The pace of growth slowed sequentially.
Operating profit was up 8% to Rs 3,694 crore, against a forecast of Rs 3,455.06 crore.
Margin contracted to 23.7% from 25.4%, against an estimate of 23.3%. It was almost flat sequentially.
Cost of materials consumed rose 24.3% to Rs 5,000 crore. Sequentially, however, it fell 8%.
Volumes grew at 5% over a year earlier in the third quarter, compared with 4% in the preceding three months, with more than 75% of the business gaining market share, according to the company.
“We are cautiously optimistic in the near term and believe that the worst of inflation is behind us,” said Sanjiv Mehta, chairman and managing director at HUL. “This should aid in a gradual recovery of consumer demand.”
Peers including Marico Ltd. and Dabur India Ltd. flagged concerns over continued weakness in rural demand in Q3, in their respective quarterly updates. Operating margins were impacted during the October-December period due to currency fluctuations and high inflation in key markets, they said.
However, the companies expect input cost pressure to have bottomed out and margins to see improvement in the second half of the current fiscal.
Segment-wise, revenue from home care rose 32%, while beauty and personal care as well as food and refreshment grew at 10% and 7%, respectively.
During the quarter, HUL said that the company has entered a new arrangement with Unilever Group entities for the provision of technology, trademark licenses and services. Under the new agreement, the royalty and central services fees will increase from 2.65% in FY22 to 3.45% of turnover. This increase will be effected in a staggered manner over a period of three years.
Shares of HUL fell 1.36% ahead of the earnings, compared with a 0.32% decline in the benchmark NSE Nifty 50.
